Unalaska’s Geothermal Hopes Stall Without City Backing

Makushin Volcano.
Makushin Volcano.

A years-long effort to bring geothermal power to Unalaska may be on its last legs. The city government is draining its accounts for exploring Makushin Volcano, saying the project is too expensive and risky to pursue any further.

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The private trust that owns the resource disagrees, but they’re stymied without local support.

Unalaska has been trying for three decades to find an affordable way to build a geothermal power plant for the city at Makushin Volcano. But it’s never gotten off the ground.

“Right now, it’s just pretty much a dead project,” says city public utilities director Dan Winters.

Winters says the city is clearing out its geothermal savings. They’vetransferred an expiring federal grant to Akutan, and rolled their local match back into the city’s general fund. And soon, the state Legislature will likely take back the rest of the geothermal account — a $1.5 million grant that was never used.

Unalaska wasn’t always so disinterested in geothermal exploration. In the 1990s and 2000s, they partnered with the private trust that owns the resource to court developers in the Lower 48. They evenwent together to Iceland a decade ago to look at geothermal projects there.

Trustee Jack Wood wants to see that partnership revived.

“I guess all we’re looking for is being able to have a fair assessment of where the project is, not just to say the project’s a failure,” Wood says.

Once upon a time, he says all sides agreed that Makushin was a “world-class” geothermal resource. A test well drilled in the 1980srevealed a hot-water reservoir that could generate at least 12 megawatts of electricity. That’s enough heat around 10,000 homes.

Back then, the state of Alaska had control of Makushin. But they stepped back when oil prices crashed. Wood came on as a consultant for the private company that took over the lease. And in 1995, Wood and a group of investors bought the resource outright.

“We formed the Alaska limited liability company called KSLC or Kiiguusi Suuluta Land Company, and proceeded to undertake bringing in other companies to help develop the project,” Wood says.

Steam issues from the geothermal test well drilled at Makushin Volcano in the 1980s. (Courtesy: KSLC)
Steam issues from the geothermal test well drilled at Makushin Volcano in the 1980s. (Courtesy: KSLC)

Connecting Makushin to Unalaska’s electrical grid would require new wells, a power plant, dock and substations, plus miles of utility lines to stretch across water and rough terrain.

All that infrastructure is a big driver of the project’s up-front cost — anywhere from $100 million to more than $300 million.

Jack Wood says the city of Unalaska wouldn’t be expected to pay more than a third of that. But he does need them to sign on as a distributor, selling power to the town’s 5,000 residents and shipping companies.

Chris Hladick was Unalaska’s city manager for 14 years. In that time, Hladick says that he and the resource owners could never agree on a financial structure that wouldn’t raise electric rates for consumers.

“If it pencils out, it pencils out,” Hladick says. “And if it doesn’t, you’ve got to be willing to say that it doesn’t.”

But it did have a major leg up compared to other renewable energy projects in small towns, where figuring out what to do with extra power can be a challenge. Unalaska’s seafood processors can use as much electricity as the whole town combined – so much that, for the most part, they make it themselves.

Art Aliment is the engineering director for UniSea, the city’s largest plant.

“If somebody knocked on my door and said, ‘Hey, we’re gonna put together a geothermal power plant and we’re gonna sell power’ — if I can buy it cheaper to what I’m making it now, then that’s definitely something we’re gonna be interested in, and we’ll move forward with it,” Aliment says. “If it’s out there available.”

But he says geothermal developers have always wanted firm commitments from the processors that they’ll buy a certain amount of power over a certain number of years. The fishing business fluctuates, and Aliment says they can’t make any promises.

That meant the city government had to charge ahead to make Makushin viable. But over the years, local support and funding broke down.

By the time Chris Hladick left Unalaska to become the state’s new commerce commissioner in March, the city was letting go of its Makushin savings and setting its sights back on diesel – buying a fourth generator and new waste-heat recovery systems to make the powerhouse sustainable as fuel prices fell.

Jack Wood thinks that’s short-sighted — but not for the obvious environmental reasons. He says it’s about the money: long-term savings for residents and industry. That’s especially as Unalaska looks to become an Arctic support hub, with new businesses that’ll need power, too.

But Wood and his group can’t do much without a change in leadership. Right now, Unalaska is looking for a new, permanent city manager. Makushin trustee Ed Fisch says they’ll reach out to that person to resurrect the project.

“It’s going to take a cooperative effort to get this thing done,” Fisch says. “If there is a city administration and a city council that wants to work toward that end, they will find ready participants in us. And if that doesn’t come to pass, you know what? Our kids will end up owning a part of a volcano.”

For now, though, they’ll shop Makushin around to private companies alone — and wait for a chance to bring the city back on board.

KSLC has posted more documents and communications with the city of Unalaska from past attempts to develop Makushin here.